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Makale: “PRIVATISATION OF COUNCIL HOUSING” – CEM KAPTAN

Council Housing; Background, Privatisation and Management of Affordable Housing in London

Introduction

The role of council housing seems to have been distorted over the course of its lifespan. What was once successful social experiment that sheltered many people is now frowned upon and the term “council housing” itself has become a negative word association and the end to the not so easy on the eye, isolated and large structures is anticipated. The longing for change or termination of the concept of “estates” have brought its own problems with it. In this investigation I will concentrate on the actions that were taken to change and improve council housing and the methods used, one of them being privatisation. The subsequent method that goes hand to hand with privatisation is management of housing. In the last fifteen years these two have merged and the so called “private management” of mass housing have become a big business scheme and a right that has been sold on to private companies. Numerous examples of this can be seen across London causing a crisis with the local tenants of estates, especially in Borough of Camden where tax money is proposed to be invested in so called ALMO’s and PFI’s 1, whom I will be talking about later. There is also a big dilemma with new build in central London but in order to understand the need for new builds, I must first look into the history of these structures to comprehend their purpose and cultural effect back then and their purpose and cultural role now. Therefore by understanding the background, in terms of investigation, a better investigation can be carried out. In the United Kingdom, public housing, that is rented housing for households who are not able to afford either home ownership or private sector rents, is often referred to as “council housing” owing to the historical role of district and borough councils in managing public housing. More recently, semi-independent and not-for-profit housing associations or trusts, otherwise known as Registered Social Landlords are becoming increasing prevalent in operating the public housing sector. Consequently the housing provided by councils and Registered Social Landlords (RSLs) is collectively known as “social housing” 2.

Council housing in UK – a brief history; Utopian roots

The roots of council housing dates back to the evolution of urban governance during and after the industrial revolution 3. The other field is the role of utopian socialism and the need to create state provided working class housing. Between 1920 and 1970 these state provided housing were operational, taking this era up to 1975, (which could be described as its peak) council housing tenancy provided nearly a third of Britain’s housing stock. These houses were aimed to accommodate families with children, which also meant that they housed more than third of the population. This is a big social impact with the numbers alone and with time the functions of these structures shifted. Towards the end of the 20th century, with the social and economical changes along with the suppressed inconveniences of social housing, the original utopian initiative at the early establishment were forgotten and the whole idea started becoming became a pain. These homes were created as a daring social experiment that tried to create ideal homes and estates for the poor and working class families. The Housing of the Working Classes Act 1890 was the first step towards the creation of council housing. This encouraged the local authorities to improve housing in their area followed by the enactment of The Housing and Town Planning Act 1919 which led to the real creation of large scale council housing in the UK because local councils were given an allowance to build homes in areas of high housing need. Until the Second World War this continued and councils were encouraged to demolish poor quality housing to build new houses for the people living there. In 1942 in the report written by William Beveridge called Report of the Inter-Departmental Committee on Social Insurance and Allied Services (Beveridge Report)4 laid the foundations for a truly comprehensive welfare state, and mass social housing building programmes saw the expansion of inner city estates. The classic Welfare State period lasted from approximately 1945 to the 1970s, when policies under Thatcherism began to privatize public institutions, although many features of it remain today.

Figure 1: The Council Houses of Poole Street. A slightly surprising subject for a postcard, but they were substantial, wel-built houses with gardens of a wonderful size, sufficient for a family to feed themselves from

Impact of War

After the First World War came the first big surge of council housing, with a sense of schizophrenia that was created due to the Liberal Prime Minister David Lloyd George announced that the returning soldiers needed “homes for heroes“. But on the other side of the coin, the fear was that denied such opportunities, these trained soldiers would turn “Bolshevik”. (And there was the concern that the state of the slums had led to one in ten conscripts being rejected on health grounds… where were the soldiers going to come from for the next war?)5. During this period the percentage of council housing had risen to 10% by 1938 whereas before the First World War this figure was 1%. In the 20s and 30s “first-time council tenants – under pressure from housing officers were encouraged to strive for respectability. This raised the level of appearance of the estates and created a better lifestyle for the working class inhabitants. This rush of building continued until the Second World War. Immediately after World War II, the Labour government continued to build council homes with aspirations:

“The 1951 Festival of Britain showcased the new Lansbury Estate in the East End of London … the most comprehensive example yet of what Bevan called ‘the living tapestry of a mixed community’, where well-designed homes of differing sizes mixed with shops, vibrant markets and public-transport routes … maisonettes and terrace houses mingled with low-rise blocks of flats intended for single and elderly occupants. Even the furniture was designed especially… ‘The three-piece is of an entirely new design, consisting of a settee, one armchair, intended for the man – comfort being the key note – and the other for the woman, which gives firm support to the back and ample elbow room for sewing, knitting and the other spare-time occupations which fall to the lot of the housewife.'”6

Figure 2: The LCC’s Plan of a new township complete in itself. The layout of the Becontree estate, begun under Addison Housing and Town Planning Act, 1919

The Labour government of 1945-51 considered nationalising the entire stock of rented housing to start competition among the very poor of different races for limited, and exploitative, private rental places. Eventually, however, Aneurin Bevan decided that the rule should be that four council houses be built for each private one. When the conservative party won the elections in 1951, they promised 300,000 new homes. In the decade between 1955 and 1965, council housing went from being the crowning glory of the new welfare state to mass-produced barracks. They weren’t intended to be so: it was hoped that the high-rise blocks would confer prestige on a town as much as provide housing for its workers. The annual rate of total house building nudged 450,000 at its peak.7 That reflects the construction of the Regent’s Park estate, and the buildings of different periods show that clearly. On the north side of Roberts Street is a row of early Fifties high flats – not yet pure tower blocks (being still of broadly traditional brick construction, and boasting some very fine (if now poorly maintained) art deco style features such as beautifully sculpted and tactile door handles that show real quality of design. After the 1970s, councils built increasingly fewer homes, concentrating instead on repairing their ageing housing stock. The introduction of the Right to buy, under the Housing Act 1980, led to many of the better quality council properties being purchased by sitting tenants, which, together with a lack of investment in social housing during the 1980s, caused a decline in the availability of decent council housing. The Housing and Planning Act 1986 gave councils the option to transfer all, or part, of their housing stock to another landlord, such as a Registered Social Landlords. This has been widely utilised and during the 1990s the number of RSL owned properties increased, whilst the number of council owned properties declined. The Conservative period with Margaret Thatcher saw the right to buy era. Individual local authorities have always had the ability to sell council houses to their tenants, but until the early 1970s such sales were extremely rare. However, the Conservative-controlled Greater London Council of the late 1960s was persuaded by Horace Cutler, its Chair of Housing, to create a general sales scheme. Cutler disagreed with the concept of local authorities as providers of housing and supported a free market approach. GLC housing sales were not allowed during the Labour administration of the mid-1970s but picked up again once Cutler became Leader in 1977. They proved extremely popular, and Cutler was close to Margaret Thatcher (a London MP) who made the right to buy council housing a Conservative Party policy nationally.8 Most council tenants have secure tenancies. This means that they have a number of rights, such as the right to buy, the right to take on the management of their home, and the right to be consulted about important changes made to the way their homes are managed. They also have security of tenure, which means that they can stay in their home indefinitely provided that they keep to the terms of their tenancy agreement. In April 1996, the Royal Borough established the country’s first borough-wide Tenant Management Organisation (TMO) and transferred responsibility for the day-to-day management of its entire housing stock. The TMO manages the housing stock on the Royal Borough’s behalf, but the Council still owns the housing and has overall responsibility for strategic housing policies and homeless households. The relationship between the TMO and the Council is governed by a Management Agreement, which covers all areas of the landlord function. In 2002, the TMO become the first tenant / leaseholder-led Arms Length Management Organisation (ALMO) in the country and took over responsibility for major capital works from the Council.

Figure 4: Live tables on housebuilding and household from Department of Communities and Local Government

Figure 3

Council Housing – an ongoing privatisation process

Like the building of these structures throughout time, the management of these properties and the methods used to manage them have altered. Consequently this has affected the actual inhabitants and lifestyle of council housing and its tenants. At the starting point, even though a lot of effort was given into designing, a little thought was given what the management of council housing would involve. Therefore it was dealt with the obvious way and left to the local authorities. This was a new idea, therefore the local authorities were a bit wary about it. The other point is that it was unclear to managers there was any line between those tenants able to look after themselves and others needing careful control.9 So until 60’s, at least, much of the energy of estate managers went into supporting, and directing, tenants in the use of their homes. What were expected were the tenants to pay the rents regularly, take an interest in their homes, not allow unreasonable wear and tear, and to behave as a good neighbour and member of the community.10 The allocation system went hand in hand with management as again it was not until towards 1970 that voids or unlettable properties began to appear, and then only on ‘problem estates’. For the most part of council housing was a insufficient commodity for which here was hard competition, and access to it was through its gatekeepers, the housing managers. Residential qualifications were a matter of dispute between central and local government, which had different ideas about the purposes of council housing. Central policy-makers argued that they were prejudicial to returning servicemen and also inhibited general job mobility. These were the start of some of the problems with housing and management was playing a major role in the change of the housing system.

These days the management system deals with variety of issues. It has moved away from the allocation and trusted sense of structure and stopped dealing with personal problems. Nowadays management of properties is a lot more to do with just keeping the properties “liveable”. It seems local councils have two options these days in terms of deciding how to manage a property, they can either use a private management company to manage their properties or sell them off to buy to let investors, in order to rent back of them. Then using the allocation systems they are rented back of to the citizens who need them. I will talk about buy to let investors, mass house auctions and new builds in the next chapter. So the main management system that is used is ALMO’s. Whilst the local councils argue that it is the best way to manage and uphold estates and that it is the best way to use the money allocated to manage. The government had put forward the options of ‘staying as you are’ as a Housing department within the Council, transferring the ownership and management of council housing to a new or existing housing association; using Private Sector Finance Initiative or creating an ALMO. An ALMO is an independent limited company that has its own Board of Directors, but unlike a housing association, ownership of Council housing stays with the Council. The government also brought in two more initiatives. It set the ‘Decent Homes’ Standard that all social housing had to meet before 2010.11 In many cases this required new central heating, bathrooms, kitchens, doors and windows and much of the country’s council and housing association homes were in need of large scale investment. The Housing Inspectorate was also established to inspect housing organisations and award a ‘star rating’ that corresponded to the inspection teams’ judgement about how good service is and how well the organisation is run. ALMOs that achieved a two star (good) or three star (excellent) rating were able to borrow extra investment to meet the decent homes standard. So what is so bad about this ALMO. It seems as it is the best way to manage properties within the budget given to the local councils but one visit to an internet site that is set up to defend council housing or talk to many of the local tenants in the Camden area they will be against the system. They claim that Arms Length Management Organisations are the government’s strategy for two-stage privatisation.12 Democratic control is lost with the management of our homes moved into a separate private company; and tenants’ power is undermined by a board on which tenant reps are outvoted and bound by corporate responsibility. The defending organisations claim that millions is wasted on consultants, lawyers and other set up costs, new offices and big new salaries for top managers. The first stage is private management and evidently is more expensive resulting in the council running out of money, therefore having to sell on these houses in order to keep them running with the management companies. As expected it is usually the same investors who buy out these houses. So it is as if the council are being forced to sell these houses but they are doing it at their own will. The locals argue that it is a two stage “compatibility” plan. Some tenants will also be happy that their landlord is also the management of the site. There is a slight more comfort than two separate parties. Also in the longer term, it is feared that, this can lead up the whole plot of land sold to these investors and they then have the power to remove every tenant and rebuild a new structure only by law giving 20% of the new properties, which will cause even further shortage in affordable housing. I can see why these issues are important and how they are linked directly to the main issue.

The second case is PFI’s. PFI (the Private Finance Initiative) is new in housing, but has an appalling record in schools and hospitals. Housing PFI schemes are expensive, poor value for money and risky. They will lead to worse services and escalating costs, with profit-driven companies managing our homes. Tenants on the Maiden Lane estate in Camden voted by over 80% to say NO to PFI in a recent ballot (February 2004). Housing PFI is becoming increasingly unpopular with tenants and it’s record is disastrous. In February 2005 the treasury turned down a PFI bid after 6 years and £1.6 million worth of negotiations.13 The case against the Pfi is put forward by the locals as these bullet points.

1. PFI is expensive: a High rate of interest to banks and profits for the private company means less to spend on repairs and improvements.
2. PFI is risky: The PFI scheme will last for thirty years. If it goes pear shaped then tenants will pay the price.
3. PFI takes years to set up: the schemes are long-winded, complicated and often delayed until the companies get the deal they want.
4. Public housing not private profit: PFI means a private company “generating income” from your estate.
5. PFI – escalating costs: Massive amounts will be spent on lawyers, consultants, monitoring the contract and higher senior managers pay.
6. PFI – worse services: PFI schemes are notorious for poor standards and it’s difficult for the council to police the contract.
7. Winning direct investment without strings is worth fighting for. We’ve already won concessions. We can win much more! 14

This is an example of an estate in Camden area that has been refurbished. The Ampthill Square residential blocks, Camden These three 57 m blocks of flats were approved in 1965 and built as local authority housing for Camden borough, London. A refit in the 80s gave them their distinctively Lego-esque primary colour trim. In common with many high-rises in Camden they have bucolic names: Dalehead (yellow), Gillfoot (blue) and Oxenholme (red).

Figure 5: From google earth images

1.BACKGROUND
1.1 The Pride of Place investment strategy was introduced in 2000/01 and comprised five programme areas – Raising the Standard, Mechanical and Electrical, Community Safety, Estate Regeneration and Maintaining the Standard.
1.2 Pride of Place was replaced by the Investing in Camden’s Homes strategy in 2007/08, a small number of schemes remain on site and will draw to a close in the next 12 months. This report provides a brief update on progress and requests approval for amendments to scheme budgets.

2. RAISING THE STANDARD PROGRAMME
2.1 The Raising the Standard (RTS) programme has delivered works to 19,000 properties over the past 8 years, the focus has been on external elements such as roofs, windows and rainwater goods. Some larger schemes such as Ampthill Square comprised a larger scope of works and were described as ‘estate regeneration’ schemes. A table summarising outputs from the RTS programme is set out below.

Table 1 – Raising the Standard Outputs

2.2 The majority of schemes have now been completed. A few notable schemes are still on site including external works at the Abbey Estate, comprehensive improvements at Ampthill Square and communal area improvements at the Bourne Estate.
2.3 In section 4, this report provides further details on the recent cost increase report received for Ampthill Square and the change made to the scheme budget.

4. AMPTHILL SQUARE
4.1 The Ampthill Square estate consists of three 21 storey tower blocks surrounded by a mixture of low-rise flats and maisonettes. The estate was first included in the housing capital programme as an ‘estate regeneration’ project in 2000/01.15

The two management systems are PFI (Private Finance Initiative) and ALMO (Arms Length Management organisations). The Pfi is money invested private companies to repair and refurbish council housing but it is not as easy as it sounds. Because of the high interest rates and high profits, actually less money is spent on houses themselves and also because it is only a 30 year programme, anything uncompleted will be left for tenants to deal with and if anything goes wrong the companies will pull out taking the investments with them. Also when they are refurbished they are often sold at higher prices to private tenants.

So there is a lot of money in the management and refurbishing of these properties and the fact that the landlords have to compensate the cost of management brings an interesting twist to the story of why might the local councils decide that they want the sell the property and rent back off the buyers in order to then rent to people who are applying for affordable accommodation. This procedure seems to be absurd but when considering the yearly budget of a central London local council, from their prospective it seems like a better way out. Of course in the process creating chain of renting from owner to council to tenant and creating unnecessary steps and in most cases ending up paying more than a normal tenant would through an estate agent. I think one of the main problems is that properties are and have been sold by the bulk by the councils at auctions at ridiculously low prices to private buy to let investors. These investors tend to have two options to use these houses. They either let it out to students by dividing up the houses into as many rooms as possible and charging room prices which plays out to be very profitable as they are always in high demand or let it back to the council for housing the people in need. If they take the first route than this means that the people that actually need affordable housing do not get it because there is a large waiting list due to the shortage of council owned council housing. It sounds absurd but if the private investors decide to lend it back the council, it is often at a slightly higher price. I have looked online at Local Housing Allowance website and enquired how much the property I am living in would be worth if they were to rent it of my landlords to rent it back out. 16 They offered £20 more than what I was already paying. This seemed a bit peculiar as I further investigated and found out a couple of things. In an article about this family of 4 that had been on the waiting list to obtain affordable housing but because of the shortage the council decided to rent out a 3 bedroom property maisonette in the Borough of Chelsea for £850 a week to rent to this family at a standard lowered rate. 17 I am not saying that the family do not deserve to live in a nice flat; instead, it is frightening to think that the affordable housing shortage is so severe and what was once built to help the people by the government is depleted. This whole cycle of privatisation causes these ridiculous actions to be taken by the council without asking the big question to solve the big picture. Instead of investing in the housing in a sensible approach to improve quality, image and a consisted level of housing, local councils are taking the easy way out and selling them on to private investors so they don’t have to deal with these problems without thinking twice about the long term effects. Another vast issue as I have mentioned earlier is the management of these houses. There are a lot of issues that are on the agenda of “Defend council housing” organisation at the moment. It was interesting to see that a lot of the latest protests have been against the new management systems that the Camden council is trying to introduce into the council housing system. They argue the point that investing the money put aside for management purposes in private management companies is best way to take care of people using council housing. And a lot of council housing in Camden is – for now – mixed with the private – in Victorian terraces, primarily, often purchased and restored during the Seventies, and in blocks like mine – now a third privately owned. But that may not continue for long – if the LibDem-Tory Camden council has its way, since it is selling off the most valuable properties and those “too expensive” to restore. (This makes me worry for some mansion blocks in Bloomsbury, which have been allowed to degenerate to a shocking state.)

So with the many problems council housing brings and the lack of standard that it provides there has to be a new way of housing. If nothing is being done to prevent the decay of older estates and if the negativity towards them is escalating then why should we not build new structures? The risks of new structures are that when and who will decide to replace the old stuff and how will they be built? Between 2004 and 2030 the population of British is expected to increase by 6.5 million, to about 64 million.18 That translates to a demand for 200,000 new homes each year just to meet estimates of household growth.19 I think the question is why there are lots of houses seeming to be built but no affordable housing is constructed. The disturbance of balance between high price housing and affordable housing, I think is one of the reasons of the social and economic status the council housing has ended up where it is today. I will further investigate these areas to find out more about how this came to be, what are the wrong decisions made, the social effect this has on the community and the ways to maybe improve these conditions. I am beginning to realise that maybe council estates themselves are not the real problem but the action it is taken against them is. Either way the need for affordable housing is at most important and we need to solve it.